HomeMy WebLinkAboutItem 02 Discuss Subdivision Application Fee Comparison AGENDA ITEM SUMMARY Meeting Date: 4/6/2015
Meeting Type: Work Session
Staff Contact/Dept.: Jim Donovan, DPW Matthew Ruettgers,
DPW Staff Phone No: 726-3660
Estimated Time: 20 Minutes
S P R I N G F I E L D C I T Y C O U N C I L Council Goals: Provide Financially Responsible and
Innovative Government
Services
ITEM TITLE: DISCUSS SUBDIVISION APPLICATION FEE COMPARISON
ACTION REQUESTED:
Discuss development review fees, in particular as they relate to Subdivisions and
how the process/fees compare to the City of Eugene in terms of cost and timing of
fees.
ISSUE STATEMENT: During a recent subdivision project the developer asked for a comparison and discussion of Springfield’s application fees and process as compared to the same
application in Eugene. In response to the developer inquiry staff has reviewed both processes and fees to compare the respective benefits associated with each model. Staff shared this discussion with City Council in a June 19, 2014 Communication
Packet Memorandum. This work session is to address questions raised by Council concerning the timing of fees in the Springfield model and whether the collection
point for some upfront fees could be deferred to a point later in the process.
ATTACHMENTS: 1. Council Briefing Memorandum
2. Springfield Subdivision process flowchart 3. Eugene Subdivision process flowchart
4. Springfield Subdivision process flowchart – 7 Lot
DISCUSSION/ FINANCIAL IMPACT:
The subdivision processes in Springfield and Eugene are essentially identical with nearly all the same steps/milestones starting at Tentative Plan all the way through Final Plat. The primary difference in each city’s approach to working with
developers is the timing for the review of engineered improvements. The majority of the detailed review in the Eugene process occurs late in the process at the time of
the Public Improvement Plan (PIP) application and building permits; while in the
Springfield process much of this detailed review occurs early in the process during the Tentative Plan Application. The timing of these reviews also determines when
the fees for the service are charged.
Both approaches have competitive advantages for the developers in specific areas
of the residential market. Staff will discuss both Springfield’s and Eugene’s
systems as well benefits/risks of shifting the timing for collection of fees in the current Springfield system.
M E M O R A N D U M City of Springfield
Date: 3/30/2015
To: Gino Grimaldi COUNCIL
From: Anette Spickard, DPW Director
Jim Donovan, DPW Planning Supervisor
Matthew Ruettgers, DPW Building & Land Development Manager
BRIEFING
Subject: Discussion of Subdivision Application Fee
Comparison MEMORANDUM
ISSUE: During a recent subdivision project the developer asked for a comparison and discussion of
Springfield’s application fees and process as compared to the same application in Eugene. In response to the developer inquiry staff has reviewed both processes and fees to compare the respective benefits associated with each model. Staff shared this discussion with City Council in a
June 19, 2014 Communication Packet Memorandum. This memo addresses questions raised by Council concerning the timing of fees in the Springfield model and whether the collection point for
some upfront fees could be deferred to a point later in the process.
COUNCIL GOAL: Provide Financially Responsible and Innovative Government Services
The City of Springfield provides financially responsible and innovative government services when we respond to developer needs in a cost efficient manner that equitably recovers costs to the public.
BACKGROUND: The fee comparison discussion, which was initiated by a question from a recent subdivision developer, has been discussed with the developer and also with the Development
Advisory Committee (DAC) in detail. Staff presented the developer the differences in the City of
Springfield’s and City of Eugene’s approach and the timing of fees, as represented on Attachments 2 and 3. The overall consensus was an understanding that both processes have pros and cons, but in the
end, achieve the same outcome with nearly the same costs, while Springfield achieved a lower appeal
rate saving developers time and additional costs for the appeal process. Once explained, the developer continued on with the proposed subdivision and is currently approved to begin
construction.
As noted in the previous CPM dated June 19, 2014, the subdivision processes in Springfield and
Eugene are essentially identical with nearly all the same steps/milestones including Tentative Plan Approval, design and construction of privately engineered public improvements (PIP) and approval of a Final Plat. The primary difference in the processes is the timing for the submittal and review of
engineered improvements and when the cost of preparing that detailed information is paid by the developer. Looking beyond the process comparison of the two cities, Council asked whether some of
the fees could be deferred to a point later in the approval process and whether this alternative would
increase our competitive position in the regional market. This memo examines the relative benefits and risks of deferring fees currently charged early in the process in Springfield (tentative plan
submittal) to points later in the process such as PIP, Plat or Building Permit approvals.
MEMORANDUM 4/1/2015 Page 2
Costs and Benefits of Current Process
It should be noted initially that the upfront fees noted on the attached Springfield diagram
(Attachment 2) are for multi-disciplinary staff review time invested in the early tentative plan stage that streamlines procedures later in the process. The fees are collected for reviews conducted by staff
when the work is performed in the process. The team approach of reviewing and giving feedback on
design information is a benefit to the developer, public and staff because it provides more certainty to the developer about project requirements, reduces the occurrence of appeals in the land use process
and lowers overall internal costs by reducing review times needed at the PIP, Plat and Building
Permit stages. The costs to the developer occur from the preparation of more detailed engineering designs at the Tentative Plan Review stage, however they benefit from the streamlined procedures
later in the process which increases the marketable value of their property due to faster turnaround times, increased approval certainty and lower costs for the subsequent PIP, Final Plat and Building Permit reviews. Regardless of whether they are a “flipper” or a “turn key” builder, the value added
early in the process is quantifiable and transferrable.
Benefits and Risks of Deferring Fees (See Attachments 2 & 3)
Relative Costs of Service: The following discussion relies upon an example using a 78 lot
subdivision in the City of Springfield. The fee comparison generally concludes that the respective processes and fees are similar in basic steps and costs. Timing in Springfield benefits significantly
from fewer appeals and faster PIP reviews; the full costs in Eugene for these steps are an unknown
because of the external costs incurred for attorney fees and other non-city expenses. The breakout below demonstrates the relative costs of each step for each process.
Springfield Process:
• Tentative Subdivision is approximately 45% of overall costs
• PIP is approximately 15%
• Final Plat 30%
• Building Permit planning fees 10%.
Eugene Process:
• Tentative Subdivision is approximately 10% of overall costs
• PIP is approximately 35%
• Final Plat 5%
• Building Permit planning fees 50%.
Benefits and Risks of Deferrals: The concept of deferring some of the initial fees to a point later in
the process would create different benefits and risks for both the city and the developer, including some or all of the following:
Benefit 1. The primary benefit to the developer is that a deferral of application fees, delays costs initially, allowing the speculative developer to restructure financing, potentially lowering
interest costs, and then sell to the next developer or builder at a profit. There is marginal benefit to the developer of deferring initial fees unless the developer is allowed to secure the tentative approval and sell the project with its increased value brought forth by securing
entitlements.
MEMORANDUM 4/1/2015 Page 3
Risks 1. The City subsidizes the developer/development by deferring fee collection, carrying the
General Fund costs for an undetermined and unpredictable amount of time.
2. It is assumed the initial development proposal completes the process to the point of fee collection. Linking collection of fees with issuance of land use decisions may impact staff’s
ability to maintain compliance with the ORS 120 day timeline for land use decisions. Fewer
development projects may come to completion, leaving the city to pursue collection of fees owed to cover the costs already incurred.
3. Deferrals are an additional tracking and work load item for Planning and Finance staff if
financial guarantees, deferral agreements and liens are used to ensure future payment.
Discussion: The next step in development of a deferral concept is to consider the questions of how much of the application fee could be deferred and for how long will the city carry the costs for the
developer? In a standard review process, the fees are incurred primarily at tentative submittal and the first significant increase in value is tentative approval of the project. If initial application fees are deferred until tentative approval, the period of deferral would be approximately sixty days and the
amount of application fees deferred would be proportional to the size of the development. The two subdivision development scenarios discussed below illustrate this point. Review of the two scenarios
assumes no change to the review process; in both scenarios the developer must still prepare the same
amount of information for submittal to experience the efficiencies realized later in the process. The benefits to the developer in both scenarios accrue primarily from the interest savings realized when
financing of the project is reduced or re-structured for the two month period of the deferral.
Small Subdivision Scenario (See Attachment 4): Deferrals of the approximate $8000 application fee
for sixty days will realize smaller interest savings but may be a large enough amount of the overall
costs to make the concept of a deferral program attractive to smaller developments of up to 10 lots, incentivizing infill development and use of the concept by smaller developers.
Large Subdivision Scenario (See Attachment 2): Deferrals of larger application fees increase potential risks to the City if the proposal is not seen through to the collection point of the fees and interest
savings of a percentage of overall costs may be too small to warrant use of the concept of a deferral program by the larger developers.
Internally, the concept warrants a broader discussion of the potential impacts. Limited use or limiting to small subdivisions may limit impact on revenues, but requires the same internal tracking and
budgeting mechanisms or financial guarantees to be created.
Staff will be available at the Work Session to discuss this experience and provide more detail or
answer questions related to the deferral concept or the two examples provided above.
Council Options:
Council may a) take no action, or b) direct staff to further explore the concept by formulating a pilot project for a trial run if indicators researched reflect a positive outcome for the City, the public and
the development community.
REQUESTED ACTION: Give direction to staff on whether to explore the deferral concept further.
3/2014
ATTACHMENT 2
City of Springfield
TYPE II – SUBDIVISION REVIEW (Planning and Engineering)
Assumptions: 13 Acres, 78 Lots
TIMELINE ------------------VARIABLE--------------------ORS 120 STARTS----------------------+/-60 DAYS------------VARIABLE----------+/- 120 DAYS---------------------------VARIABLE
Counter
Call
DIM
Meeting
DRC_
Notice
Review
Write
Final PIP
Plan
Application
PIP
Approval
Bonding/
Construction
approval*
Final Plat Approval
Building Permit Site
Plan Review* P.C.
Appeal
LUBA
Appeal Prevention Note: Front loaded 75%
tentative plans allow Current Development
staff to actively coordinate with potential
appellants during the notification period,
respond to concerns and negotiate
resolutions agreeable to the applicant and
appellant. This process is a significant factor
in a very low appeal rate of applications.
Low appeal rates save all parties’ time and
significant litigation costs. ($5-$50K)
N
o
C
h
a
r
g
e
$
5
2
1
.
0
0
Pre-
Submittal
Application
$
3
4
6
.
0
0
$
6
3
,
3
6
4
.
7
5
Subdivision
Tentative Plan
Application
Tentative
Decision
$
1
8
,
9
0
0
Final Plat
Pre-Sub.
Application
F.P.
Application
$
3
4
6
.
0
0
$
3
9
,
7
8
4
.
5
0
$
1
6
,
4
5
8
.
0
0
*
*For the purposes of this flow
chart the costs for Development
Review Construction Inspection
and Building Permits have been
excluded. The fees reflected are
the $211 per lot planning fee for
review of the building permit.
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$139,720.25
Ap
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P
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n
t
i
o
n
PIP Process:
The informal PIP review begins upon
submittal of the DIM application.
Development Engineering staff is heavily
involved from the beginning of the project
through the tentative approval to the point
the majority of the design work/issues have
been completed. This results in shorter
review times once the Final PIP plans are
submitted (typically 2 reviews).
Final Plat Process:
The applicant has the option at the time of
PIP application have the final plat reviewed
concurrently, reducing the time of approval
at the time the applicant elects to construct
or bond for the required PIP improvements.
3/2014
ATTACHMENT 3
City of Eugene
TYPE II – SUBDIVISION REVIEW (Planning and Engineering)
Assumptions: 13 Acres, 78 Lots
TIMELINE ------------------VARIABLE----------------------ORS 120 STARTS -------------Variable +/- 45 Days------VARIABLE----------+/- 120 DAYS--------+/- 60 DAYS---VARIABLE
Completeness
Review Notice
Determination of
completeness /
incompleteness
PEPI Plan
Application
PEPI
Approval
Bonding/
Construction
approval*
Final Plat Approval
Building Permit Site
Plan Review* P.C.
Appeal
LUBA
Appeals:
It is understood this back loaded process
tends to result in a higher rate for appeals at
the Planning Commission and LUBA level.
This is due the reduced amount of design
level detail required for tentative approval.
Appeals result in higher costs for the
applicant and a longer approval period which
is not reflected on this flow chart. In the
above example an appeal would require an
application fee of $4504.42 plus legal fees.
Pre-
Submittal
Application
(Optional)
H
o
u
r
l
y
Subdivision
Tentative Plan
Application
Director
Decision
$
4
5
,
0
0
0
*
H
o
u
r
l
y
F.P.
Application
$
7
,
8
8
2
.
8
8
$
6
0
,
0
6
0
.
0
0
*
*For the purposes of this flow
chart the costs for Development
Review Construction Inspection
and Building Permits have been
excluded. The fees reflected are
the $770 per lot planning fee for
review of the building permit.
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$124,271.25*
Tentative Plan and PEPI Process:
The PEPI review process in this back loaded
system occurs after the decision has been
issued. The tentative plan review has limited
engineering review resulting in a longer PEPI
review process and additional comments /
design changes not identified in the tentative
plan review and approval. Land use appeal
rates increase in response to uncertainties
and confusion that may result from the
scarcity of information available at the time
of tentative decisions and public notice.
*Fees and Schedule:
The information reflected on this chart is
representative of a near flawless application. It
does not reflect time delays for incomplete
applications, additional reviews, Adjustment
Review Process or appeals. Land Use
applications and PEPI reviews which require
many of these additional items are completed
by staff on an hourly basis, which may result in
substantial increases to this overall fee.
$
9
,
0
0
8
.
8
5
T
I
A
$
2
,
3
1
9
.
5
2
3/2014
ATTACHMENT 4
City of Springfield
TYPE II – SUBDIVISION REVIEW (Planning and Engineering)
Assumptions: 1 Acres, 7 Lots
TIMELINE ------------------VARIABLE--------------------ORS 120 STARTS----------------------+/-60 DAYS------------VARIABLE----------+/- 120 DAYS---------------------------VARIABLE
Counter
Call
DIM
Meeting
DRC_
Notice
Review
Write
Final PIP
Plan
Application
PIP
Approval
Bonding/
Construction
approval*
Final Plat Approval
Building Permit Site
Plan Review* P.C.
Appeal
LUBA
Appeal Prevention Note: Front loaded 75%
tentative plans allow Current Development
staff to actively coordinate with potential
appellants during the notification period,
respond to concerns and negotiate
resolutions agreeable to the applicant and
appellant. This process is a significant factor
in a very low appeal rate of applications.
Low appeal rates save all parties’ time and
significant litigation costs. ($5-$50K)
N
o
C
h
a
r
g
e
$
5
2
1
.
0
0
Pre-
Submittal
Application
$
3
4
6
.
0
0
$
7
,
8
5
9
.
6
5
Subdivision
Tentative Plan
Application
Tentative
Decision
$
3
,
2
0
0
Final Plat
Pre-Sub.
Application
F.P.
Application
$
3
4
6
.
0
0
$
4
,
1
8
1
.
0
0
$
1
,
4
7
7
.
0
0
*
*For the purposes of this flow
chart the costs for Development
Review Construction Inspection
and Building Permits have been
excluded. The fees reflected are
the $211 per lot planning fee for
review of the building permit.
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$17,930.65
A
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P
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n
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o
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PIP Process:
The informal PIP review begins upon
submittal of the DIM application.
Development Engineering staff is heavily
involved from the beginning of the project
through the tentative approval to the point
the majority of the design work/issues have
been completed. This results in shorter
review times once the Final PIP plans are
submitted (typically 2 reviews).
Final Plat Process:
The applicant has the option at the time of
PIP application have the final plat reviewed
concurrently, reducing the time of approval
at the time the applicant elects to construct
or bond for the required PIP improvements.